NEW YORK: A four-day streak of record closes ended for the Standard & Poor’s 500 index Wednesday after Caterpillar reported weak earnings and falling oil prices hurt energy stocks.
Caterpillar, which makes mining and construction equipment, is considered an important barometer of the global economy. The plunge in Caterpillar’s third-quarter profit discouraged investors and stalled a two-week surge in the stock market. Energy stocks dropped as the price of oil fell to its lowest in almost four months.
The S&P 500 had surged 6 percent over the previous two weeks.
“We need to let a little bit of air out of the balloon here,” said Alec Young, a global equity strategist at S&P Capital IQ. “We’ve seen a huge rally, so there’s a bit of short-term-exhaustion.”
The S&P 500 dropped 8.29 points, or 0.5 percent, to 1,746.38, ending its longest streak of record closes since mid-May.
Energy stocks fell the most of the 10 industry sectors in the S&P 500. Oil slipped $1.42, or 1.4 percent, to $97.80 a barrel, on higher U.S. supplies of crude and weak demand for fuel.
Along with weaker earnings, Caterpillar issued a lower profit forecast. Its stock dropped $5.41, or 6.1 percent, to $83.76.
Broadcom was another company that disappointed Wall Street with its third-quarter earnings. The communications chip maker fell 78 cents or 2.9 percent, to $26.36. It reported adjusted results that exceeded Wall Street expectations, but the company’s earnings forecast was weak.
Boeing raised its profit estimate for the full year because deliveries of commercial planes continue to accelerate. The plane maker’s stock climbed $6.54, or 5.3 percent, to $129.02.
The Dow Jones industrial average fell 54.33 points, or 0.4 percent, to 15,413.33 The Nasdaq composite dropped 22.49 points, or 0.6 percent, to 3,907.07.
While some earnings disappointed investors on Wednesday, most are reporting profits that are better than expected. About 60 percent of the companies in the S&P 500 that have reported third-quarter earnings have beaten analysts’ forecasts, according to data from S&P Capital IQ.
“Obviously we’ve had one casualty today with Caterpillar but, so far, most companies have beaten market expectations,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
S&P 500 companies are expected to report earnings growth of 3.5 percent for the July-to-September quarter over the same period a year earlier. Revenue is expected to rise by 3.9 percent.